3. Pixelworks, Inc. (NASDAQ:PXLW)
Number of Hedge Fund Investors: 15
Pixelworks, Inc. (NASDAQ:PXLW) is a semiconductor company that specializes in the design and sale of semiconductors used in display devices. The company’s products include processors for smartphones, image processors, digital signal processors for display systems, and other products that control image display on screens. The leading supplier of visual processing solutions recently partnered with Seasun Games to enhance JX3 Ultimate Mobile’s mobile visual processing.
Pixelworks issued a negative outlook while reporting Q1/2024 results that were in line with projections. Financial results for the upcoming quarters are anticipated to be impacted by a stop in orders placed by its largest mobile client and delays in the delivery of its new mobile visual processor. Furthermore, the Chinese subsidiary faces imminent deadlines for listing on the Shanghai STAR Market, which carries the risk of having to reimburse Chinese pre-IPO investors up to $44 million if the listing fails. Investors may think about selling existing stakes in light of these challenging business conditions and the impending IPO deadlines.
Notwithstanding temporary difficulties, Pixelworks has demonstrated a noteworthy YoY annual revenue growth in TTM by 3.59% and an improvement in gross margin by 3.97%, rising from 43.08% in 2023 to 44.79% in TTM. The company has a strong financial base due to its $46.2 million cash balance and just $2.78 million in debt. Pixelworks has the ability to surpass analyst estimates in terms of revenue growth in the second half of the year if it is able to overcome technical obstacles and earn fresh design wins. Furthermore, the financial risks connected to the Chinese company may be reduced by fruitful discussions or delays for the Shanghai STAR Market listing. Important victories, such as the Infinix GT 20 Pro from Transsion and the iQOO Z9 Turbo smartphone from Vivo, highlight the company’s increasing market reach and use of its technologies in mid-to lower-tier devices. Transsion’s mobile unit TAM growth into new markets is still planned, and an increase in TrueCut forecasts is anticipated. Moreover, the firm is transforming into a mobile silicon provider, fueled by high-performance mobile gaming demand.
As per analysts, the company has an average price target of $2.50 and an upside potential of 140.38% from the current stock price of $1.04. Analysts have rated PXLW as a “strong buy.”
Meanwhile, elite funds are piling into this stock as well, with hedge fund positions increasing from 5 in Q4 2023 to 15 in Q1 2024, giving us a clear hint that investors are bullish on PXLW’s stock. Israel Englander’s Millennium Management is the largest stakeholder in the company, with 703,440 shares worth $1.81 million.
